So I'm going to start a rumor here: I think, before the year is out, that Google is going to try to buy Sprint.
The ties between the companies...
There's a provocative column by Joe Nocera in today's NYTimes about LinkedIn's IPO last week. Nocera thinks that the investment banks Morgan Stanley and Merrill Lynch -- which LinkedIn hired to take it public -- essentially stole hundreds of millions of dollars that should have gone to LinkedIn's treasury.
Here's how it works. The investment banks gauge demand for the shares, which are sold by the company's treasury, and set what they believe is a fair-market price. Proceeds of those initial sales go to the company. In LinkedIn's case, Morgan and Merrill set a price for the shares three times, the last and highest being $45. LinkedIn took in $352 million for 7.5 million shares. The investment banks get 7 percent of that.
But once the shares are out, they can be -- and are -- traded freely. On its first day, LinkedIn traded as high as $122 per share, closing at $94.25, more than twice the initial price. LinkedIn got none of that money.
Who did? The people to whom Morgan and Merrill sold the initial shares. That's usually their best customers, people with connections, or other BFFs. A 100 percent gain in one day is a nice day's work.
Nocera says it's a scam. It's the investment banks' job to know what the market sentiment is, he says, and it's their fiduciary duty to price the coming-out shares as close to what they think the market will pay. And at the end of the day (literally), the market was apparently willing to pay $90. LinkedIn should have collected not $352 million but $700 million, Nocera argues. And their investment banks should have been paid $49 million, not a mere $25 million or so.
Why would the banks leave $25 million on the table by underpricing? After all, taking a company public is hard work. Maybe they traded some of their own stock and gained more than that. Maybe they were willing to chalk up the $25 million as a cost of doing business to appeal to their best customers. Promotional expense, you know.
Is this something that should be -- or can be -- fixed? I'm not so sure. I don't know that it's an investment bank's responsibility to take into account a market gone nuts. Maybe a best effort is all that's truly called for. though how you'd judge that is a mystery for smarter minds than mine. I know I don't want the SEC putting its thumb on the IPO scale.
Maybe a Dutch auction, which is how Google went public, is the right anwer. (The Street hated it, but it doesn't seem to have hurt Google's prospects any.) Maybe there should be a rule that a percentage of all first-day sales -- say, 7 percent, same as the banks' take -- be funneled back to the company issuing the shares. It might make for a more orderly coming out, or it might just move the madness to Day 2.
This may just be one of those things that Just Isn't Fair. One thing Nocera's inarguably correct about: it looks like hell at a time when the financial business ought not to be resorting to Old Tricks of the Internet Bubble.
My first article for public consumption in quite a while, and a return to old stomping grounds: A review of the upcoming Droid X mobile phone.
Overall a nice piece of hardware. I suspect I'll like Android more as I get used to it.
I somehow missed the news that YouTube is now automatically captioning all videos in English. That's awesome news for the accessibility crowd. It's a little problematic for the content industry.
Think about it. There's about 20 hours of video uploaded to YouTube every minute. For every one of them, Google's now generating text. This text is not created on the fly as the video is played back; it's presumably built as part of each video's preprocessing and is made part of the video's metatext. Which means it's being indexed, which means that the videos are now competing directly with more traditional textual information.
It's true that the Google voice-to-text technology is not exactly accurate. (My Google Voice transcripts are generally pretty incomprehensible.) But this is all the more reason that serious content competitors need to be looking more than ever at using YouTube to protect their brands.
Microsoft's Bing search engine will be rolling out UI changes starting in the next few days. Since its launch about a year ago, Bing has been innovating mostly on its interface, and these changes continue that mission. The emphasis for the update will be on providing more context -- including real-time feeds -- and visual information.
What's worrisome about Bing, from a content provider's perspective, is that the search engine will provide so much context that a click-through to the originating site becomes unnecessary. (This, of course, allows Bing and not the publisher to monetize the publisher's content.) Microsoft doesn't see that as much of an issue. From Redmond Channel Partner:
One attendee of the keynote asked [Yusef] Mehdi [Microsoft's SVP of online audience business] if Microsoft’s efforts to render more contextual data within Bing would result in fewer click-throughs to sites. Mehdi responded that he doesn't see cause for concern. "What we have found is there are more click-throughs when you add richer captions," he said.
There's a interesting data point, if he'd be willing to share his numbers. It would also be interesting to discover if rich-content clickthroughs convert on a publisher's site better than clicks based on less-rich content. In other words, do people who click on high-context links bounce more or less than referrals from low-context links? Or are high-context links killing the geese with the golden eggs?
I've been around the Macintosh world since about 1985, so I'm real familiar with Guy Kawasaki. Guy was the software evangelist for the Mac -- the guy who went around persuading software developers to write for this unusual and innovative computer. In the intervening years, he wrote a couple of books about what became known as guerrilla marketing; those books are still on my shelves. In certain circles, he was (and is) quite famous. In certain circles, he became sort of yesterday's news. Now, he runs a venture company and a news aggregator Alltop.com.
But there's an excellent interview with him in this past Friday's NYTimes, where he dispenses some pretty insightful advice about careers and marketing:
Sales is everything. As long as you’re making sales, you’re still in the game....
They should teach students how to communicate in five-sentence e-mails and with 10-slide PowerPoint presentations. If they just taught every student that, American business would be much better off... Because no one wants to read “War and Peace” e-mails. Who has the time? Ditto with 60 PowerPoint slides for a one-hour meeting. What you learn in school is the opposite of what happens in the real world. In school, you’re always worried about minimums. You have to reach 20 pages or you have to have so many slides or whatever. Then you get out in the real world and you think, “I have to have a minimum of 20 pages and 50 slides.”
...In the end, success in business comes from the willingness to grind it out. It’s not because of the brilliant idea. It’s because you are willing to work hard.
Most people who graduate from college think they have to make a perfect choice.... They think that their first job is going to determine their career, if not their life. Looking back, that’s absolutely incorrect. By definition you cannot make a mistake in your first job... Let’s say you join a start-up, and it implodes. You would learn more about leadership inside a company that crashes than you would inside the next Google. Specifically, you will learn what not to do. You can’t make a mistake as a college graduate.
Jobs for college graduates should make them gain knowledge in at least one of these three areas: how to make something, how to sell something or how to support something.
It's a quick read. Worth the time.
Film crews are not uncommon in my neighborhood. "Gossip Girl," in particular, has been coming around a few times a year. But this week, the nabe's parking will be disrupted for two productions: the CBS drama "The Good Wife" (which is set in, ummm, Chicago) and the FX show "Damages."
I spent the day yesterday in a ballroom listening to data visualization guru Edward Tufte. Given my increasingly hummingbird-like attention span, a full day of concentrated focus was as welcome as it was unusual. A good time, and well worth the money.
Perhaps the coolest things of the day were when he produced a copy of the first English translation of Euclid's Elements -- the book where he laid out the basics of geometry -- dating from 1582. And the other was his showing a first edition first printing of Galileo's 1610 observations of the moons of Jupiter and sunspots (and, oh by the way, the heliocentric model of the solar system).
But what I found most provocative...
Haven't seen this discussed anywhere else, but I've been noticing some small but significant tweaks in how Google's presenting its search results. (It's true that Google is always fixing this and changing that, but these are particularly interesting, have persisted for several days, and show signs of sticking.)
As part of its Universal Search, Google has been pushing at its users all sorts of content -- video, shopping, review snippets, blogs, "real-time" feeds - to the point that cracking the top page was becoming all but impossible. For some terms, the "top 10" had become the "top 3," with most of them below the fold. SERP pages had become pretty chaotic and less than useful.
But over the last week or so, Google has been going back to SERPs that look more like they did 10 years ago: overwhelmingly textual. (The font size is bigger, too.) If you want to see the other stuff, you still can; just navigate in the left margin.
The tradeoff is that it's harder than ever to get a "pure" search without personalization. Even if you're logged off and your detailed search history is unavailable, Google will try its hardest to customize the search by your IP address, location or cookies previously set in your browser. That all makes a search professional's job that much harder; too many of us try to justify our existence by providing clients with SERP position, as if that position proved much of anything. Worse, there's no really clear way to be sure that positions pulled using tools like AWR or WebCEO are "pure," because Google could be finding ways to "customize" those results.
Best answer is as it always has been: judge results not on SERP position but on traffic. And if you're really hardcore (which you should be), judge your results not just on traffic, but on traffic that converts. Of course, that requires clients to understand what a valid conversion is, but no one said this job was going to be easy....
Google today announced its inevitable reach into real-time search, instantly adding results from Twitter, FriendFeed and MySpace. As cool and useful as this may be, I've got a couple of questions about it.
How do they assign relevance to tweets? Google's search algorithms are based, in large measure, on the number and quality of backlinks -- relevant links to a given page. How is Google assigning relevance to tweets? By hashmarks? By the number of followers on an account? That's obviously problematic, given the triviality of manipulating it. By the number of relevant followers? Then what determines relevance?
Is more weight given to official pronouncements from known or trusted entities? How do the entities get to be known or trusted? And if "official" sites do get preference, isn't that contrary to the whole idea of Twitter?
What about a common situation where a reporter for a publication tweets about a story that's about to break on their site or in print? How is that differentiated from an unsubstantiated rumor that some celebrity has died? It's not Google's place to be judging the truth value of tweets or posts, but I worry (as often) that this will only accelerate a race to the bottom.
And one more: Tweets are 140 characters long. Google snippets are 156. By presenting tweets on SERPs, Google is preempting one possible means for Twitter to monetize: ads. Why click through to a Twitter page when you get all you need on Google's?